Retirement planning is a pretty new concept in India. So it was no surprise that when PGIM conducted a retirement survey in 2020, they found that
1. A majority of Indians had not planned for their retirement
2. Only 20% thought fit to consider inflation in their retirement calculations
3. A whopping 78% relied on fixed deposits or insurance plans to help them with their retirement
4. On an average, the retirement corpus that they were building for was 8.8 times their current annual income
Such alarming statistics, I am sure, are not purely an Indian thing. World over, planning and investing for retirement in a disciplined fashion is not the norm. However, western countries have a healthy social security net that would keep people out of really bad situations, and many such countries would have state-sponsored health coverage that would take care of the inevitable big bills in old age.
India has neither, at least not in a manner that will cater to a middle-class life-style and care aspirations here. Hence, planning, saving, and investing for retirement becomes a must-do activity during the earning years of an individual in India.
P V Subramanyam’s book – “Retire Rich – Invest Rs 40 a day” was the first book on this topic. The original version was published in 2011 and sold more than 150,000 copies, and is now available in a new edition (since 2019).
First a word about the author. Subra (who writes the Subramoney blog) is someone I have known for more than 12 years now. I remember calling him before I (and Chandra) started FundsIndia. And in that very first conversation he told me (for the first of several times) that the ‘golden rule is that the man with the gold makes the rules’ – an aphorism that I realized the truth of many years later.
Subra is a veteran of the advisory industry. He has both been an advisor and has trained and coached hundreds of advisors in his career. And more importantly, he has interacted with hundreds of investors of all stripes and colours from across the country with a variety of economic profiles and financial aspirations.
And in this book, Subra draws from his years of counselling people to distil the wisdom from across the Indian investment spectrum.The chapters are brimming with actual examples of real people doing the right (or often, the wrong) things with their money.
The best thing about this book is its focus – it talks about a variety of financial topics, a range of investment instruments, presents a lot of tools and so forth, but it does it all to serve the purpose of helping you with retirement planning. And there is a reason for that, as the author himself alludes to occasionally in the book – most Indians plan for many things in their life – short-term goals like buying a house(s?), wedding, and medium term goals like their kids’ education, but they do all that at the cost of planning for their retirement.
For this reason, the book starts with and devotes an entire segment to the need for retirement planning. Subra goes to great lengths and takes great pains to tell you exactly why you should be planning for the long-term future starting now (whatever the ‘now’ is for the reader in his/her career, it does not matter).
A person planning for their retirement in their 20s is very smart, but a person NOT planning for their retirement in their 30s is very dumb. You may not be (or have been) very smart, but you can avoid being very dumb. As the saying goes, ‘the best time to plant a tree was 20 years ago, the next best time is today’. This opening segment gets a bit colourful with all of Subra’s observations about how typical Indian families deal with questions about spending, saving, and retirement. You can sense a hint of bias to Mumbai style of earnings and living styles, but given that’s the author’s home turf, that is to be expected.
The second segment is on the detailed planning – ‘how to plan for your retirement’ and contains the main essence of the book. Subra goes into every element of planning for your retirement – when to retire, how to figure out how much you will need, how to estimate what your returns will be, how to factor in inflation, what instruments are available for retirees, and many more. He takes the practical approach of a teacher – the author’s training roots showing here – and comes at a single topic from multiple angles, hoping that at least one will get through to the reader with clarity and force. The topic of post-retirement inflation, for example, comes into play again and again. Given that this is one of the most ignored aspects of retirement planning, it is well worth the repetitions.
Subra devotes the entire third segment of the book to mistakes that a person should avoid. Having conversed with him quite a bit over the years, I am not a bit surprised by this. The most important thing that he likes to emphasize to anyone coming to him for financial advice is to learn to say ‘No’. Most financial products that are being sold to us are bad and you will rarely, if ever, go wrong by saying no. The cost of a mistake can be huge, but the upside foregone by saying ‘no’ is miniscule. I cannot agree more with Subra on this, and this segment is well worth the attention it gets. The chapter on ‘Peer pressure’ alone is full of practical wisdom that a reader will rarely find anywhere else.
The final segment is about the nitty-gritty of retirement planning – what investment options are available, what are their natures, what is applicable when etc. The most important aspect of this segment is the set of case studies presented here. Again, Subra surely hopes that there is at least one case that will apply fully well to the reader, or he or she can take a bit from every case for their own situation.
There is much more in the book – worksheets, calculators, tools, glossary etc – that makes the book useful not just as a source of gyaan, but also a veritable workbook. One way that a person can read this book is with a pencil in their hand, working out their own life situation (net worth calculation, retirement corpus calculation etc) along with the author.
The impressive thing about this book is its comprehensiveness – it talks about EVERY single thing that could be associated with planning for retirement, investing for retirement, or living your retired life. It covers special situations, unique requirements, and goes beyond the financials to dealing with questions of wills and trusts as well. In short, all you need to plan for your golden years.
The readers of this blog are financially astute people (for the most part). Even so, it is very likely that they will find an aspect of their planning enhanced from having read this book (it was for me, sure enough). And as importantly, this book would make an ideal recommendation or a gift to that brother-in-law or a colleague who is oblivious to the financial perils of living a long life beyond their earning years.
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Note: You can find one of the most useful retirement calculators on our site here – it takes into account all pre and post retirement inflation and investment returns – Retirement calculator. And of course, you will find portfolios tailor-made for retirement planning in our Prime Portfolios.